There are a number of options for your company to raise money from investors without going public. But, before going down this road, it is important to know the BC laws that apply to any company or other entity that raises money from investors.
What are Securities Laws?
If someone is looking to invest in your business, with an expectation to make a profit, what the investor receives in return for that investment is a security. This could include shares in your business.
There are two basic requirements of British Columbia’s securities legislation: registration and disclosure.
Registration Requirements
If you are in the business of selling securities, you must be registered (licensed) with the British Columbia Securities Commission (the Commission). However, if you’re looking to sell securities in your own business only, this is probably not required. If you’re unsure, whether this registration applies to you or not, contact the Commission for clarification.
Disclosure Requirements
As a rule of thumb, if you are selling your own securities (shares in your company), you are required to file a comprehensive disclosure document called a prospectus with the Commission. On filing the prospectus, your business will become a public company.
However, there are some exemptions to this rule. For example, if you are issuing securities
- as a private issuer,
- to employees, directors, officers and consultants,
- to family, friends, and business associates,
- under a minimum amount,
- to an accredited investor, or
- under an offering memorandum.